AI-Enabled PCs Flood the Market, but Demand Remains Uncertain

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On Fri, 15 Nov, 12:07 AM UTC

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AI-capable PCs are increasingly entering the distribution pipeline, making up 20% of Q3 2024 shipments. However, industry experts question whether there's genuine demand for these devices or if they're simply part of the natural evolution of PC hardware.

AI PCs Gain Momentum in Shipments

In the third quarter of 2024, AI-capable PCs accounted for 20% of all PC shipments worldwide, totaling 13.3 million units. This marks a significant 49% sequential growth from the previous quarter, according to industry analyst firm Canalys 1. However, it's important to note that these figures represent shipments to distributors, not necessarily sales to end-users.

Defining AI-Capable PCs

Canalys defines an AI-capable PC as a desktop or laptop with dedicated hardware for accelerating AI workloads, such as a neural processing unit (NPU) embedded in recent processors 1. Microsoft has introduced its own "Copilot+ PC" designation for Windows systems with an NPU performing at 40 TOPS (Tera Operations Per Second) or more 1.

Market Composition and Projections

Windows devices narrowly led AI PC shipments in Q3 with a 53% share, while Apple's MacOS devices accounted for the remainder 2. Forecasts suggest AI-enabled systems may represent 43% of PCs by 2025 and the majority by 2026 1.

Uncertain Demand and Use Cases

Despite the increasing availability of AI-capable PCs, industry experts are questioning the actual demand for these devices. Bryan Ma, IDC VP for Devices Research, noted that the industry appears to be "desperately searching for a use case for AI PCs" 1. Currently, AI PCs seem to be a solution in search of a problem.

Factors Driving Adoption

Several factors are influencing the adoption of AI-capable PCs:

  1. Future-proofing: Many businesses are choosing AI PCs as a precautionary measure rather than for immediate AI-specific needs 1.

  2. Windows 10 End-of-Life: The approaching end of Windows 10 support in 2025 is expected to drive PC refreshes, with AI capabilities being an added feature 12.

  3. Hardware Evolution: The transition to AI-capable PCs seems inevitable as vendors update their portfolios with processors featuring embedded NPUs 1.

Challenges and Considerations

  1. Price Premium: AI-capable PCs typically carry a 10-15% price premium over standard PCs 1.

  2. Performance Trade-offs: While NPUs are more power-efficient, GPUs still outperform them in raw performance for AI tasks 1.

  3. Copilot+ PC Adoption: A Canalys survey found that 31% of channel partners do not plan to sell Copilot+ PCs in 2025, indicating potential resistance to higher-end AI PCs 2.

As the PC industry continues to evolve, the true impact of AI capabilities on consumer choices and computing experiences remains to be seen. While AI-enabled PCs are becoming more prevalent, their success will ultimately depend on the development of compelling use cases and the ability of manufacturers to demonstrate clear value to consumers.

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